A topical issue for Donate Tuesday: Will the new tax law affect charitable donations?
The law on tax cuts and employment, which came into effect earlier this year, doubled the standard deduction. The standard deduction has increased from $ 6,350 in 2017 to $ 12,000 for singles and $ 12,700 to $ 24,000 for married persons who file together.
Patrick Rooney, an economist and professor of philanthropy, said nonprofit organizations fear losing important donations this year. Households would probably give about $ 13.1 billion less a year, down 4.6%, according to her research.
Taxpayers adjust the amount of their donations in a given year based on whether their donations are tax deductible or their tax liabilities will be affected, according to a separate Philanthropy Outlook report produced by the Lilly Family School of Philanthropy from Indiana University.
People can double charitable donations every two years to exceed the standard deduction, experts said. Since the standard deduction has doubled, people can choose to donate to charities every two years to exceed their deduction.
This strategy makes no sense to everyone, Ros said. Clients in the 12% federal portion save only 12 cents per dollar donated to a charity, for example. It is also difficult for some people, especially those with a fixed budget, to double donations every two years.
See: It's now easier than ever to give charity on Tuesday
According to a US Trust study on high net worth philanthropy, the rich are less likely to change their habits. A majority of wealthy donors said they expect to maintain their level of donations (84%) and 4% said they plan to increase this amount by 2018, regardless of the new tax law .
Some 50% said tax breaks had influenced their charitable donations, while 17% said they were influenced by tax incentives. "It's a belief in the organization's mission that encourages donations, with the tax benefit being secondary," said Juan Ros, financial advisor at Lamia Financial in Thousand Oaks, California.
Rachel Hutchisson, vice president of citizenship and philanthropy at Blackbaud, a software company working specifically in the not-for-profit sector, said many people give up on the last day of the year. The impact is not known.
However, so far, charities have little reason to worry, she said, because the strong US economy should help boost donations this year. According to Blackbaud data, charitable donations increased 4% during the year and 10% online starting November 26th.
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